Best Money Market Account
These days, it’s American Express Bank. Faced with a shortage of creditworthy borrowers, banks around the country are quietly slashing the rates they pay savers. Not AmEx, though. This online bank continues to pay 1% on money market accounts.
You say 1% is peanuts? Well, it certainly is by historical standards. But remember, the government is paying nothing — just about absolute zero — on Treasury bills. Money market funds yield only a few pennies more. For your can’t-lose money, AmEx Bank is a safe, sensible alternative.
What I especially like about AmEx Bank is that, if I wish, I can electronically transfer up to $250,000 per day between the account and my hometown checking account — in or out. Many banks, in an effort to keep you stuck, are placing ridiculously low limits on electronic transfers. If I spot a great investment opportunity elsewhere, I can move out of my AmEx account immediately — in quantity. Makes that 1% yield a little easier to swallow.
There is no minimum to open an account, and the FDIC insurance is up to $250,000 per depositor ($500,000 for joint accounts).
Best Mutual Fund Family
I’m tempted to say, “None of the above.” Truth be told, I really prefer to cherry-pick the best mutual funds from a variety of families — because no fund group has a monopoly on performance, and some of the finest funds come from obscure organizations. By opening an account with a discount broker, you can gain access to hundreds, or even thousands, of funds — all tracked on a single statement.
Still, it’s clear that some families do a superior job of attracting and retaining talented managers. Among the no-load (no sales charge) groups, T. Rowe Price (NASDAQ:TROW) stands out. According to the number-crunchers at Lipper, TROW has logged the best overall performance of any no-load family over the past 10 years.
TRP funds I consider ripe for buying now include Equity Income (MUTF:PRFDX), High Yield (MUTF:PRHYX), Short-Term Bond (MUTF:PRWBX) and Spectrum Income (MUTF:RPSIX). All four funds require a $2,500 initial minimum investment.
If you like, you can even wrap these funds into a T. Rowe Price discount brokerage account and trade individual securities alongside your mutual funds. However, I recommend this approach only if you’ve got a sizable portfolio ($100,000 or more). At that level, TROW charges just $9.95 for Web-based stock trades.